020 7898 0500
The pound performed well at the start of a busy week.
The pound hit its best level in two weeks against the euro on Monday and its best in almost a month against the US dollar. Much of that could be explained by traders positioning themselves ahead of a streak of key data that arrives before the week is out.
For sterling, the week’s big event is Thursday’s GDP report, which provides the first snapshot of economic growth across the whole of the second quarter. Equally significant for the US dollar is the inflation report due out tomorrow. That has also taken on greater prominence after a disappointing jobs report last time out, which sent traders scurrying to tweak their interest rate projections.
Markets are also keeping an eye on events in the Middle East. The price of oil ticked up yesterday after weekend reports that President Trump was prepared to admit defeat seemed to lose momentum. Instead, the president refused to engage with Iran’s six demands to reopen the Strait of Hormuz, leading to doubts that the two sides would be able to reach a deal in the near future.
The Japanese yen was the big faller across currency markets yesterday. Having been propped up by intervention from the US government, the yen fell against almost all of its major rivals yesterday, leading to renewed suspicion that the Bank of Japan would have to wade in once more.
Overnight, the Reserve bank of Australia unanimously voted to keep interest rates on hold at 4.35%. The Aussie dollar was seen down slightly against the pound and the US dollar in early trading.
GBP: Riding the wave
This week could be up and down for the pound, what with all the economic datapoints flying in from all angles. The GDP release is sure to move the dial, but there is a very good chance the US schedule impacts the pound to dollar rate before then.GBP/USD: the past year
EUR: Growth not the only factor
An outperformance in last week’s GDP report was good news for the euro. However, a mixed day on Monday proved currency markets are looking beyond that when assessing the euro.GBP/EUR: the past year
USD: Getting a march on inflation
The US dollar weakened against the pound and the euro ahead of Wednesday’s inflation data. This has quickly come to be seen as crucial for the dollar’s near-term trajectory. With a slight fall in the headline inflation rate expected, traders are pricing in a lower chance of Fed action. That could all change come tomorrow afternoon.USD/GBP: the past year
For more on currencies and currency risk management strategies, please get in touch with your Smart Currency Business account manager on 020 3918 7255 or your Private Client account manager on 020 7898 0541.
